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hbbd``b`u@IHEX 3X "2A`V @B'Hl``bdV8 2h About Wellspring Capital Management Wellspring Capital Management is a leading private equity firm headquartered in New York. 2016) (citing numerous cases, recognizing disagreement among courts regarding whether fraudulent conveyance action is a tort action); MainStreet Bank v. Nat'l Excavating Corp., 791 F. Supp. Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. at 382. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. Under certain conditions, section 548 allows the avoidance of a transfer made within two years of the date of the filing of the bankruptcy petition. 1996)). The amended complaint also details numerous emails sent by Mr. Carles and Mr. Johnson to a representative of Prospect, urging Prospect to defer its right to payment in the event of a default. at 385. REGISTRATION STATUS . [Amended Complaint, 32]. Further, if the statement is solely a speculative prediction about some potential business venture or course of action being contemplated, it is not actionable. These emails may be a lot of things, but negligent misrepresentations they are not. The Court does not have to decide whether Prospect is a preexisting or a subsequent creditor. And the best part of all, documents in their CrowdSourced Library are FREE. 1985). Litigation. About Wellspring Capital Management Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $4.4 billion of private equity capital. Wellspring Capital Management LLC Chief Executive Officer Bill Dawson has taken a leave of absence, days after a former employee alleged in a lawsuit that he threatened her for accusing his. The plaintiff relies on the fact that Ellett was unable to pay the debt owed to Prospect at the time that it had to be paid in full; however, this is not the only relevant point in time. The alleged statements simply do not constitute actionable statements that can form the basis of a negligent misrepresentation claim. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). As with the plaintiffs assertions around disinterested governance, such allegations may (or may not) bear any semblance to the actual facts. At all times relevant to these claims, Wellspring Capital controlled (a) Wellspring Capital Partners The first and second causes of action are dismissed. If our offering sounds like something you would like to discuss, please get in touch on any of our contact details or the form below. Please Update this case to get latest docket information. Jan. 30, 2023). Wellspring Capital Management has acquired 38 organizations. Charles E. Walker, Jr. argued in support of dismissal due to lack of a triggering creditor based on Prospect's secured status, failure to state a claim under New York law due to lack of insolvency, on equity grounds because Prospect failed to obtain a personal guaranty from Mr. Walker and because the distributions were specifically contemplated by the loan transaction, and due to failure to state a claim for fraudulent conveyance under South Carolina law. Relevant here: the plaintiff/litigation trust alleged that SportCos directors: Finally, the litigation trust also asserted a variety of other counts in its complaint related to other facts, circumstances, and actions that are not the subject of this Alert. An actual fraudulent conveyance is any "conveyance made . 987, 999-1000 (Bankr. Wellspring Capital, Mr. Carles, and Mr. Johnson were not insiders of AcuSport, and the amended complaint does not allege that they had any special knowledge or information about AcuSport that was not available to the public. 541, 546 (Bankr. New York law prohibits both actual and constructive fraudulent conveyances. The defendants' remaining arguments need not be addressed. It is Bavaria's largest city and the third largest city in Germany (after Berlin and Hamburg). [Amended Complaint, 49]. Federal Rule of Bankruptcy Procedure 7012(b). ), Create custom alerts for specific article and case topics and, I took a free trial but didn't get a verification email. These emails can hardly be considered negligent misrepresentations. Adversary Proceeding No. The plaintiff responds that the express terms of the choice of law provisions provide that the clause applies only to the parties to the Loan Agreements and the Amendments and that the defendants' indirect connection to the parties to the agreements, and the nature of their received benefit, a distribution, are not sufficient to render them third-party beneficiaries of the Loan Agreements and the Amendments. Accordingly, SportCo began negotiations with certain of its lenders around a potential restructuring transaction. In Ashmore for Wilson, the District Court considered the question of how a fraudulent conveyance claim should be characterized for conflict of law purposes. 20-50554, 2021 WL 4823513 (Bankr. at 382. Instead, they may form the basis for a negligent misrepresentation claim if the party making the misrepresentation possesses some special expertise (by way of his job title or position, for example), or has some special knowledge about the particular fact that is allegedly misrepresented. Will Others Follow? 1001 to 5000 Employees. Wellsprings facts, as alleged, are fairly straightforward. Their most recent investment was on Jan 1, 2020, when Steele Solutions raised Id. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The. The defendant represented to the plaintiff, and to an appraiser who performed an appraisal of the garage, that the parking garage had 500 parking spaces. Tex. Using a sophisticated network of for-profits, shell corporations, and consultancies, Wellspring has poured out an incredible $1.1 billion into nonprofits, most of which is hidden from prying eyes in donor-advised funds. They are simply not statements of preexisting fact that were false when made. When it comes to helping companies that show promise, Wellspring Capital Management is overflowing with support. 1991) (unpublished table decision). The firm functions as a strategic rather than tactical partner, providing management teams with top-line support, M&A experience and financial expertise, and access to resources. New York law and South Carolina law differed as to whether such a transfer was permitted. On 05/20/2022 Wellspring Capital Management, LLC Wellspring Cap filed an Other lawsuit against Barry, III.This case was filed in U.S. Bankruptcy Courts, New York Southern Bankruptcy. Wellspring, 2021 WL 4823513, at *10. 962 0 obj <>stream The Uniform Commercial Code defines insolvency as the inability to pay debts in the ordinary course or when they come due, while the Bankruptcy Code defines insolvency as debts exceeding assets. "To survive a motion to dismiss, 'a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face."'" . Posted By: Imright , 3/3/2023 9:31:52 PM. Wellspring also rejected in cursory fashion the defendants argument that it is not necessarily a breach . Wellspring Capital Management LLC Chief Executive Officer Bill Dawson has taken a leave of absence, days after a former employee alleged in a lawsuit that he threatened her for accusing his son of sexual assault. Wellspring Capital is a boutique discretionary management service - with a portfolio positioned for high performance. Federal Rule of Bankruptcy Procedure 7012(b) provides that Federal Rule of Civil Procedure 12(b) applies in adversary proceedings. We are motivated and incentivised to succeed. Menu Home; Rankings. Wellspring Capital, through defendants Mr. Carles and Mr. Johnson, allegedly represented to Prospect that: (1) Ellett could purchase assets of AcuSport for $14.8 million; (2) the purchase would result in the Debtors' capturing 20% to 30% of AcuSport sales; (3) the Debtors could acquire $14 million of AcuSport inventory at a substantial discount; and (4) Ellett would immediately realize a $7 million profit on the sale of the inventory acquired in the purchase. The Loan Agreements and the First and Second Amendments each contain a choice of law provision, providing that New York law applies. 0 Additionally, the plaintiff argues that the third element of New York's third-party beneficiary test is not met because there is no express intent in the Loan Agreements or the Amendments to compensate the defendants in the event the distributions were not paid and in fact, the Loan Agreement indicates the opposite by virtue of the inurement clause found in Section 13.1. Less than a year later, the liquidation trustee sued Wellspring and related parties, alleging breaches of fiduciary duty of care and loyalty. An action with multiple causes of action was commenced by Prospect Capital Corporation in South Carolina state court and was removed to this court on September 6, 2019. Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. If you want your business to survive, you need to understand your-self. San Francisco Bay Area, Silicon Valley), Operating Status of Organization e.g. The case status is Pending - Other Pending. . The court must construe the allegations in the complaint in the light most favorable to the plaintiff. While property interests are defined by state law in the absence of a compelling federal interest, the Court would look to the Bankruptcy Code in making a determination of whether property is property of the estate under section 541. 2010); Saifullah v. Johnson, 948 F.2d 1282, at *1 (4th Cir. . Revenue: $500 million to $1 billion (USD) Competitors: Unknown. It is notable that the first and second causes of action are based only on South Carolina law; however, because the parties disagree as to whether South Carolina or New York law should apply, the Court will analyze the first and second causes of action under both. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. Id. It had previously received notification, in early 2018, that the Borrowers would default on their obligation under the Loan Agreements and the Amendments in the second quarter of 2018. Phone: 650 729-8626. Wellspring Capital Management Group LLC ("Wellspring"), a New York-based private equity firm, announced that on May 29, 2020, it closed the acquisition of Steele Solutions, Inc. ("SSI" or the "Company"), a value-add supplier into the industrial automation sector. The defendants argue that in the event the Court finds the choice of law provision does not apply, South Carolina choice of law principles should be consulted to reach a finding that New York law applies. The firm functions as a strategic rather than tactical partner, providing management teams with top-line support, M&A experience and financial expertise, and access to resources. Nor is it necessary for the Court to decide whether New York or South Carolina law applies under South Carolina's choice of law principles. from 8 AM - 9 PM ET. Wellspring Capital Management Fund Manager Website www.wellspringcapital.com Fund Category Private Equity Close Date 0000-00-00 Fund Family Wellspring Capital Partners Native Currency USD Fund Manager's Location 605 Third Avenue 44th Floor New York, NY 10158 United States +1 (212) 000-0000 Fund Domiciles Canada 544 and 550 and S.C. Code 27-23-10; (2) avoidance and recovery of fraudulent transfers by SportCo against the Transferee Defendants pursuant to 11 U.S.C. Wellspring has one of the best track records in middle-market private equity; its people, capital and reputation bring certainty to transactions. Wellspring targets investments with the following characteristics: Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. Particularly where negotiations may involve releases, indemnification, or similar provisions, be advised that the ever-present tendency for counterparties to exercise 20/20 hindsight is fully in effect. At the conclusion of the hearing, the Court took the motions under advisement. The firm prefers to invest through means of carveout, buyouts, add-on, public to private and growth capital. 2021 by wellspring capital Management. Many of the facts underlying the Wellspring decision are neither unique nor unusual. Bloomberg View columnist Barry Ritholtz looks at the people and ideas that shape markets, investing and business. Wellspring Capital Management. The emails, often using colorful language and harassing tones, essentially represent to Prospect that if the AcuSport transaction is not completed, Prospect will not get paid on its obligations. The defendants argue that Prospect is a subsequent creditor, because it had knowledge of and approved of the distributions prior to them being completed. The District Court stated that "[w]hether a fraudulent conveyance claim should be characterized as a tort action is uncertain and disputed among American jurisdictions." The portfolio manager is also a co-investor in the strategy. The court addressed the dissent's finding, that the defendant's determination of the number of parking spaces was a matter of judgment or opinion and was therefore unactionable. Their most recent acquisition was Caring Brands International on Oct 25, 2021. 1988) (adopting rule from Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487 (1941) stating that a federal court sitting in diversity should apply the choice of law rules of the state in which it sits). From October 2017 to April 2018, Mr. Carles and Mr. Johnson sent numerous emails to representatives of Prospect, attempting to induce Prospect to agree to forego exercising its rights in the event of a default. In Fall 2018, SportCo Holdings, Inc. (SportCo) was facing severe financial distress. Cancellation and Refund Policy, Privacy Policy, and PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. UniCourt uses cookies to improve your online experience, for more information please see our Privacy Policy. By continuing to use this website, you agree to UniCourts General Disclaimer, Terms of Service, Sav. The firm's objective is to bring partnership, experience and value creation to each investment. 2100 Geng Road, Suite 210 Palo Alto, CA 94303. The parties disagree on what law should applyfederal or state, and further if state law applies, New York or South Carolina. Wellspring has earned the reputation as a trusted, reliable partner and is often the preferred partner of a portfolio companys senior management team. 23, 2006) (stating that some courts characterize fraudulent conveyance actions as tort actions, while others characterize them as matters in equity). Accordingly, Wellspring reinforces the importance of disinterested governance and arms length dealing in connection with the restructuring process. After the defendants filed replies, the Court held a hearing on June 18, 2020. Finally, although the plaintiff asserts that federal conflict of law principles should apply, he argues that even under South Carolina conflict of law rules, South Carolina law should apply. [Amended Complaint, 93]. In 2010, Bain Capital acquired the company for US$1.8 billion. At Wellspring we pride ourselves on client service. WELLSPRING CAPITAL MANAGEMENT, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. In this process, SportCo initially exchanged a term sheet with certain of its lenders in early November 2018 and allegedly reached an agreement in principle in late December 2018. The defendants argue that New York law should apply, first, because the Loan Agreements and the First and Second Amendments contain choice of law provisions stating that New York law will apply and second, because South Carolina choice of law analysis dictates that New York law should apply. The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. Under either New York or South Carolina law, the plaintiff's third cause of action for negligent misrepresentation fails to state a claim for which relief can be granted. D. Del. Home; About Us; Investment Approach. Attorney advertising. Despite that agreement in principle, it was alleged in relevant part that: Unable to agree on the release and indemnification issue, SportCos out-of-court restructuring failed, and SportCo defaulted on its funded debt shortly thereafter. Importantly, however, the Wellspring court declined to dismiss the litigation trusts duty of loyalty claim, stating on a cursory basis that Drawing all inferences in favor of the Trustee, the Complaint contains sufficient allegations that the D&O Defendants breached their duty of loyalty regarding the Failed Out of Court Restructuring. Id. But Wellspring would arguably undermine the ability to negotiate for what are customary and, indeed, necessary protections for corporate decisionmakers in those same transactions, such as releases, indemnity, or exculpation. As we here at Ropes & Gray look back on 2021 and ahead into 2022, we call your attention to the lessons of Friedman v. Wellspring Capital Mgmt., LLC (In re SportCo Holdings, Inc.), Case No. Please see our Privacy Policy. Regardless, market participantsand equity sponsors in particularshould view Wellspring as an important reminder as to how both process and substance matter in restructuring negotiations. Angel, Fund of Funds, Venture Capital), This describes the stage of investments made by this organization (e.g. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . Consumers want to see how a business took care of business. Investors in its most recent fund include the Washington State Retirement System, Minnesota State Board of Investment, Connecticut Retirement Plans & Trust Funds, Kansas Public Employees' Retirement Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American. 1984) for the proposition that under New York law, opinions are actionable in a negligence context. Share Your Design Ideas, New JerseysMurphy Defends $10 Billion Rainy Day Fund as States Economy Slows, This Week in Crypto: Ukraine War, Marathon Digital, FTX. Total number of employee profiles an organization has on Crunchbase, Total number of Crunchbase contacts associated with this organization, Descriptive keyword for an Organization (e.g. They were not statements of presently existing fact. Over $134 million of the loan proceeds were used to fund distributions to Wellspring Capital Partners, WCM GenPar IV, L.P., WCM GenPar IV GP, LLC, F. Hewitt Grant, Charles E. Walker, Jr., Todd Boehly, Bernard Ziomek, and Andrew Kupchik (collectively, the "Transferee Defendants"). The plaintiff's first and second causes of action are based on 11 U.S.C. Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. D.S.C. Brought up in a family enjoying long-term success in real estate investment, Avrohom instead turned to the stock market. 544 and 550 and S.C. Code 27-23-10; and (3) negligent misrepresentations against Wellspring Capital, Mr. Carles, and Mr. Johnson. Id. The firm's objective is to bring partnership, experience and value creation to each investment. S.D. The December 26, 2017 email stated, "So you will waive [your interest payments]. Wellspring Capital Management is a leading private equity firm headquartered in New York. Wellspring Capital is a boutique discretionary management service with a portfolio positioned for high performance. This approach has historically delivered returns well above inflation Our clients The United States Court of Appeals for the Third Circuit wasted no time getting the new year off to a roaring start through its ruling in In re LTL Mgmt., LLC, Case No. 2008) (citing Southmark Corp. v. Crescent Heights VI, Inc. (In re Southmark Corp.), 95 F.3d 53, 53, n.7 (5th Cir.